UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C.

                               FORM 10-KSB/A No. 1

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

          Amendment No. 1 to Annual Report on Form 10-KSB for the Year
                             Ended December 31, 2001

                              INFODATA SYSTEMS INC.
       ------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

          Virginia                   1-0416                   16-0954695
 ----------------------------      -------------          ---------------------
 (State or other jurisdiction      (Commission            (IRS Employer
     of incorporation)              File Number)          Identification Number)

           12150 Monument Drive
           Fairfax, Virginia                                   22033
     ---------------------------------------                 ---------
     (Address of principal executive offices)                (zip code)

       Registrant's telephone number, including area code: (703) 934-5205

The undersigned registrant hereby includes the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-KSB for
the year ended December 31, 2001, a set forth in he pages attached hereto:

   Facing Page  Revenue for the Year Ended December 31, 2001
   Part I.      Customers
   Part II.     Item 5. Market for Common Equity and Related Stockholder Matters
                Item 6. Management's Discussion and Analysis
                Item 7. Financial Statements
   Part III.    Item 13. Exhibits, List and Reports on Form 8-K
   Exhibit 23   Consent of PricewaterhouseCoopers LLP

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                      INFODATA SYSTEMS INC.

Date: April 15, 2002                  By: /s/   Steven M. Samowich
                                         ---------------------------------------
                                      Steven M. Samowich
                                      President and Chief Executive Officer
<PAGE>
                              INFODATA SYSTEMS INC.

                 AMENDMENT NO. 1 TO ANNUAL REPORT ON FORM 10-KSB
                      FOR THE YEAR ENDED DECEMBER 31, 2001

FACING PAGE

The facing page of the Company's 10-KSB as filed with the Securities and
Exchange Commission on April 1, 2002 is amended to reflect that the registrant's
revenues for the fiscal year ending December 31, 2001 were $15,525,000.

PART I

Customers

Part I "Customers" of the Company's 10-KSB as filed with the Securities and
Exchange Commission on April 1, 2002 is amended to reflect that sales to
government customers represented approximately 71% and 50% for the years ended
December 31, 2001 and 2000, respectively.

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters

From September 1994 to July 2001, the Company's Common Stock was quoted on the
NASDAQ SmallCap Market under the symbol "INFD". On July 19, 2001, the Company's
Common Stock was delisted from the Nasdaq SmallCap Market due to non-compliance
with that market's minimum net tangible assets requirement and commenced trading
on the NASD OTC Bulletin Board under the symbol "INFD".

The table below shows the range of closing sale prices for the Common Stock for
the quarters indicated.
                                       2001                     2000
                                 High        Low          High       Low
        First Quarter           $1.63      $0.75         $6.03     $1.69
        Second Quarter           1.88       1.00          3.50      1.50
        Third Quarter            1.66       0.57          2.50      1.75
        Fourth Quarter           0.88       0.52          2.06      0.38

The market quotations reflected above are inter-dealer prices, without retail
mark-up, markdown or commissions and may not represent actual transactions.

The Company has not paid cash dividends on its Common Stock and presently has no
intention to do so. It believes that execution of its operating plan requires
the Company to retain available funds to support future business activities.
Payment of cash dividends on the Company's Common Stock in the future will be
dependent upon the earnings and financial condition of the Company, and other
factors, which the Board of Directors may deem appropriate.

As of March 15, 2002, there were approximately 350 record holders and 1,500
beneficial holders of the Company's Common Stock.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

FORWARD-LOOKING STATEMENTS RELATING TO PRODUCT AND SERVICE DEVELOPMENT, FUTURE
CONTRACTS, REVENUE, AND THE ADEQUACY OF WORKING CAPITAL ARE BASED ON CURRENT

                                       2
<PAGE>
EXPECTATIONS THAT INVOLVE UNCERTAINTIES AND RISKS ASSOCIATED WITH NEW PRODUCTS
AND SERVICE OFFERINGS INCLUDING, BUT NOT LIMITED TO, MARKET CONDITIONS,
SUCCESSFUL PRODUCT DEVELOPMENT, SERVICE INTRODUCTION AND ACCEPTANCE, THE
INTRODUCTION OF COMPETITIVE PRODUCTS, ECONOMIC CONDITIONS, AND THE TIMING OF
ORDERS AND CONTRACT INITIATION. THE COMPANY'S ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM CURRENT EXPECTATIONS. READERS ARE CAUTIONED NOT TO PUT UNDUE
RELIANCE ON FORWARD-LOOKING STATEMENTS. THE COMPANY DISCLAIMS ANY INTENT OR
OBLIGATION TO UPDATE PUBLICLY THESE FORWARD-LOOKING STATEMENTS, WHETHER AS A
RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

Company Overview

The Company provides its customers with complex information technology solutions
in the area of knowledge management. The Company specializes in creating
solutions that are enabled for use over internal intranets as well as the public
Internet. These products and services are provided to corporate and government
workgroups, departments and enterprises in three market segments. The segments
are information technology consulting services (Solutions), sales of proprietary
products (Proprietary Products), and the sale of third party software and
hardware (Third Party Products). Solutions includes systems integration,
document management analysis and implementation, training, and consulting
services surrounding the implementation of the Company's Proprietary Products,
Third Party Products, and other related services. Proprietary Products include
sales of INQUIRE/Text software, Compose software, Aerial software and their
associated maintenance. Third Party Products include software and hardware with
some related services. For the year ended December 31, 2001, Solutions accounted
for 79% of the Company's revenues; Proprietary Products accounted for 10% of
revenues, and Third Party Products accounted for the remaining 11% of revenues.
Revenues increased by 19% in 2001 as compared to 2000. For the year ended
December 31, 2000, Solutions accounted for 81% of the Company's revenues;
Proprietary products accounted for 13% of revenues, and Third Party Products
accounted for 6% of revenues.

On March 30, 2000, the Company acquired a business unit from Earth Satellite
Corporation specializing in providing software development services to the U.S.
government intelligence community. The Company issued 40,000 shares of its
Common Stock with a fair market value of $3.563 per share, which was equal to
the average of the closing bid and ask prices of the Company's Common Stock on
that date. On February 9, 2001, the Company issued an additional 13,334 shares
of its Common Stock with a fair market value of $1.50 per share, to Earth
Satellite Corporation pursuant to a working capital adjustment provision
included in the acquisition agreement between the Company and Earth Satellite
Corporation in this transaction, which resulted in a purchase price adjustment
of approximately $20,000 that was attributed to goodwill. The acquisition cost
of this business unit as of December 31, 2001 was approximately $199,000,
including $37,000 of direct cost attributed to the business unit's sole
contract. The acquisition value of that contract is being amortized over its
life of 18 months and as of December 31, 2001; the Company had fully amortized
that amount.

At December 31, 2001, the Company had net operating loss carryforwards ("NOLs")
aggregating approximately $13,554,000 available to affect future taxable income.
Under Section 382 of the Internal Revenue Code of 1986, as amended ("Code"),
utilization of prior NOLs is subject to certain limitations following a change
in ownership. As a result of the Company's prior acquisition of AMBIA
Corporation in 1997, the Company is subject to limitations on the use of its
NOLs. Accordingly, there can be no assurance that the Company will be able to
utilize a significant amount of its NOLs. Due to the uncertainty of the
Company's future taxable income against which the NOLs may be utilized, a full
valuation allowance has been established with respect to the NOLs as a deferred
tax asset.

Revenue from consulting services is recognized as the work progresses. Any
amounts paid by customers prior to the actual performance of services are
recorded as deferred revenue until earned, at which time they are recognized in
accordance with the type of contract. Revenue from software licenses is
recognized in accordance with the provisions of the Statement of Position 97-2,
"Software Revenue Recognition"; as amended. Revenue from post customer support
and maintenance agreements is recognized over the period that such support is
provided. Deferred revenue is recognized with respect to pre-payments of
maintenance agreements.

                                       3
<PAGE>
Deferred revenue at December 31, 2001 was $747,000. This related primarily to
amounts from maintenance revenue on the INQUIRE/Text software product and on
third party software maintenance agreements. The margins that will be realized
on transactions involving deferred revenue depend on the type of service
rendered by the Company. Most of the Company's maintenance revenue on
proprietary products pertains to INQUIRE/Text, which is a mature software
product.

The components of the Company's cost of revenue are dependent on the product or
service. For consulting, the most significant item is the direct labor cost of
the consultants. Other cost components include any subcontractor costs, any
non-labor direct costs such as travel, and any associated indirect costs (e.g.,
office rent, administration, etc.) allocated to the consulting engagement.
Indirect costs are allocated based on head count and square footage of office
space. For Third Party Products and associated maintenance, the cost of revenue
includes the cost incurred by the Company to acquire the product/service,
shipping and delivery charges, associated taxes, any customization work done by
the Company, and any special packaging costs incurred prior to shipment. The
cost of maintenance revenue includes the customer service and software
engineering personnel supporting the product and an allocation of associated
indirect costs based on head count and square footage of office space. For
Proprietary Products, the Company includes in revenue the shipping, delivery,
packaging, production, the direct labor of personnel involved in delivering the
product and any associated expenses involved with the installation of the
product for the purchaser.

The Company's future operating results may vary significantly and are difficult
to predict due to a number of factors, of which many are beyond our control.
These factors include the demand for our services and products, the level of
product and price competition; the length of the consulting services sales
cycle; the delay or deferral of customer implementation; the success of our
direct sales force and our indirect distribution channels; the mix of products
and services sold; the timing of hiring of new employees and/or consultants; the
ability of the Company to control costs; and general domestic economic and
political conditions which could have an adverse effect on the Company's ability
to meet its operating goals.

Critical Accounting Policies and Significant Estimates

The preparation of consolidated financial statements requires management to make
judgments based upon estimates and assumptions that are inherently uncertain.
Such judgments affect the reported amounts of revenues on long-term contracts.
Management continuously evaluates its estimates and assumptions related to
long-term contracts and award fee provisions. Management bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions.

The following is a summary of the Company's most critical accounting policies
used in the preparation of our consolidated financial statements.

A portion of our revenue is derived primarily from long-term contracts. Revenues
on long-term fixed-price or time and material contracts with a maximum price are
generally recognized using the percentage-of-completion method of accounting.
Such revenues are recorded based on the percentage that costs incurred in the
applicable reporting period bear to the most recent estimates of total costs to
complete each contract. Estimating future costs and, therefore, revenues and
profits, is a process requiring a high degree of management judgment, including
management's assumptions regarding future operations of the Company as well as
general economic conditions. In the event of a change in total estimated
contract cost or profit, the cumulative effect of such change is recorded in the
period the change in estimate occurs. Frequently, the period of performance of a
contract extends over a long period of time and, as such, revenue recognition
and our profitability from a particular contract may be adversely affected to
the extent that estimated cost to complete or award fee estimates are revised,
delivery schedules are delayed, or progress under a contract is otherwise
impeded. Accordingly, our recorded revenues and gross profits from year to year
can fluctuate significantly. In the event cost estimates indicate a loss on a
contract, the total amount of such loss is recorded in the period in which the
loss is first estimated.

                                       4
<PAGE>
Certain contracts include award fee provisions for increased or decreased
revenue and profit based on actual performance against established targets.
Award fees are included in estimated contract revenue at the time the amounts
can be reasonably determined and are reasonably assured based on historical
experience and other objective criteria. Should we fail to perform sufficiently
under such contracts, previously recognized revenues could be reversed and/or
future period revenues could be reduced.

We have recorded a full valuation allowance to reduce our deferred tax assets to
the amount that is more likely than not to be realized. In the event we were to
determine that we would be able to realize our deferred tax assets in the future
in excess of our net recorded amount, an adjustment to the deferred tax
valuation allowance would increase income in the period such determination is
made.

CONSOLIDATED RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2001 AND
2000

Results of Operations

Year Ended December 31, 2001 Compared to Year Ended December 31, 2000.

Revenues

The Company derives revenue from the three segments of Solutions, Proprietary
Products and Third Party Products. Solutions revenue include consulting services
for both commercial and government customers. Proprietary Product revenues
include the sale of INQUIRE/Text software products and services and related
maintenance, and sales of the Company's Compose software and other plug-in based
software products. Third Party Products include software and hardware along with
associated software maintenance, sold to both government and commercial
customers. Total revenue increased by $2,503,000, or 19%, from $13,022,000 for
the year ended December 31, 2000 to $15,525,000 for the year ended December 31,
2001. Revenue for each period consisted of the following:
<TABLE>
<CAPTION>
                                                    (Dollar Amounts in Thousands)
                                                          Twelve Months Ended
                                       December 31, 2001    December 31, 2000    Increase (Decrease) %
                                       -----------------    -----------------    ---------------------
                         Solutions
                         ---------
<S>                                         <C>                 <C>                      <C>
                Business Solutions          $      3,800        $       5,897            (36%)
                      Intelligence                 8,154                4,282             90%
                           INQUIRE                   260                  369            (30%)
                                   ------------------------------------------------------------------------
           Total Solutions Revenue          $     12,214        $      10,548             16%
                                   ========================================================================

              Proprietary Products
              --------------------
                Compose and Others          $        722                  705              2%
                      INQUIRE/Text                   856                1,044            (18%)
                                   ------------------------------------------------------------------------
        Total Proprietary Products
                           Revenue          $      1,578        $       1,749            (10%)
                                   ========================================================================

         Total Third Party Products
         --------------------------
                           Revenue          $      1,733        $         725            139%
                                   ========================================================================
                      Total Revenue         $     15,525        $      13,022             19%
                                   ========================================================================
</TABLE>
                                       5
<PAGE>
Revenue from Solutions increased overall by $1,666,000, or 16%, from $10,548,000
for the year ended December 31, 2000 to $12,214,000 for the year ended December
31, 2001 including sales to related parties amounting to $1,677,000 in 2000 and
none in 2001. The Business Solutions unit within the Solutions segment decreased
by $2,097,000, or 36%, from $5,897,000 for the year ended December 31, 2000 to
$3,800,000 for the year ended December 31, 2001 due to the Company's de-emphasis
in providing services for early-stage technology companies. The Intelligence
Solutions unit within the Solutions segment increased by $3,872,000, or 90%,
from $4,282,000 for the year ended December 31, 2000 to $8,154,000 for the year
ended December 31, 2001, due to an increase in classified government work. The
INQUIRE Solutions unit within the Solutions segment decreased by $109,000, or
30%, from $369,000 for the year ended December 31, 2000 to $260,000 for the year
ended December 31, 2001 due to a decline in INQUIRE/Text maintenance and INQUIRE
consulting services.

Proprietary Product revenue decreased by $171,000, or 10%, from $1,749,000 for
the year ended December 31, 2000 to $1,578,000 for the year ended December 31,
2001. The primary reason for the decline in Proprietary Products was due to the
overall decline in INQUIRE/Text related revenue, which will continue to decline
over time as customers move applications off mainframes. For the year ended
December 31, 2001, Third Party Product revenues increased by $1,008,000, or 139%
from $725,000 in 2000 to $1,733,000 for the year ended December 31, 2001. The
increase in third party software revenue was primarily due to the Company's
continuous effort to sell third party software and associated software
maintenance for certain consulting engagements that included hardware and
software components even though low margins were expected in these engagements.

Gross Profit

Gross profit increased by $561,000, or 20%, from $2,780,000 for the year ended
December 31, 2000 to $3,341,000 for the year ended December 31, 2001. The gross
margin as a percent of revenue was 21% for both years. The Third Party Product
sales and licensing fees for 2001 more than offset losses on certain fixed price
contracts, which resulted in no change in the gross margin of the Company
between 2001 as compared to 2000. See Note 9 to the financial statements for
information on segment profits.

Research and Development Expenses

Research and development expenses increased $108,000, or 28%, from $379,000 for
the year ended December 31, 2000 to $487,000 for the year ended December 31,
2001. The overall increase was due to the Company's decision to increase
spending for the enhancement of existing proprietary software products.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $740,000, or 15%, from
$4,776,000 for the year ended December 31, 2000 to $4,036,000 for the year ended
December 31, 2001. The decrease was primarily due to reductions in selling,
general and administrative personnel costs during 2001.

Gain on sale of investment

On February 9, 2001, the Company sold its holdings of common stock and preferred
stock of Buckaroo.com, Inc., a Silicon Valley-based on-line commodity exchange
site that serves the computer chip market, to six private investors for a total
of $1,092,740 in cash. The Company originally obtained such shares in July 1999
for $24,575. As a result of the sale of such shares, the Company recorded a gain
of $1,068,165 during the first quarter of 2001.

Interest Income and Expense

Interest income decreased $48,000, from $100,000 for the year ended December 31,
2000 to $52,000 for the year ended December 31, 2001. The decrease was due to
lower balances in short-term investments during the year ended December

                                       6
<PAGE>
31, 2001, as well as lower interest rates applied to cash and cash equivalent
balances throughout the year which generated lower interest income compared to
the previous year.

Interest expense increased $60,000, from $28,000 for the year ended December 31,
2000 to $88,000 for the year ended December 31, 2001. The increase was due to
higher credit facility balances in 2001 compared to 2000 and approximately
$34,000 in late fees.

Liquidity and Capital Resources

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. However, as reflected in the
accompanying consolidated financial statements, the Company continues to suffer
recurring losses from operations resulting in a negative cash flow from
operations. In addition, the Company's credit facility expired on April 30,
2001, thus, accelerating all amounts due under that credit facility. These
factors, including the uncertainty surrounding whether and when additional
financing will be secured and whether the Company will meet its budget
expectations, indicate that there is substantial doubt about the Company's
ability to continue as a going concern for a reasonable period of time. The
financial statements of the Company do not include any adjustments relating to
the recoverability of assets and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern. The
Company's continuation as a going concern is dependent on, among other things,
its ability to obtain a new credit facility and meet its 2002 budgeted cash flow
objectives.

Although, the Company believes that it will be able to obtain a new credit
facility and meet its projected budget projections, there can be no assurance
that the Company will be able to secure financing sufficient for its needs and
at terms favorable to the Company. Additionally, there can be no assurance that
the Company will be successful in meeting budget expectations and replacing its
credit facility in 2002. Failure by the Company to obtain sufficient financing,
meet its budget expectations, or replace its credit facility may have a material
adverse effect on the Company's financial position, results of operations or
cash flows.

At December 31, 2001, the Company had cash and cash equivalents of $1,002,000
and net working capital of $741,000. The Company maintained a working capital
line of credit with Merrill Lynch Business Financial Services Inc. that expired
on April 30, 2001, thus accelerating all amounts due under that line of credit.
As of December 31, 2001 and 2000, the Company had outstanding borrowings of
$616,000 (which included $6,800 of accrued interest) and $722,000 (which
included $22,000 of accrued interest), respectively, under this line of credit.

Net cash used in operating activities for the year ended December 31, 2001 of
$816,000 was due to the Company's net loss of $150,000. The primary adjustments
to the net loss to arrive at net cash used in operating activities included (i)
increases in accounts payable and accrued expenses of $428,000, deferred revenue
of $157,000, goodwill and other intangible amortization of $117,000, and
depreciation and amortization of $147,000; and (ii) decreases primarily
attributable to the gain on the sale of an investment asset of $1,068,165
resulting from the Company's sale of its investment in Buckaroo.com, Inc., an
increase in accounts receivables of $400,000, and an increase in prepaid
expenses and other assets of $345,000.

Net cash provided by investing activities of $1,569,000 for the year ended
December 31, 2001 was derived primarily by the maturing of various short-term
investments and the sale of the Company's investment in Buckaroo.com, Inc. This
was partially offset by the purchase of property and equipment and short-term
investments.

Net cash used by financing activities of $72,000 arose from purchases under the
employee stock purchase plan, which amounted to $41,000 and net repayments under
short-term debt of $113,000.

                                       7
<PAGE>
Proposed Merger

On March 1, 2002, the Company was notified by its major United States
Intelligence Community customer that the scope of a large contract (the
"Customer Contract"), accounting for approximately 40% of the Company's revenue
in 2001, was going to be substantially reduced. Although the Company believes
that it had performed well under the Customer Contract, the terms of the
Customer Contract give the government customer the right to change the scope of
its services engagement, which right is typical in virtually all government
contracts. As a result of the foregoing, the Company has reduced its expenses to
adjust for this loss of revenue by reducing the number of its employees,
reducing its rent expense and reducing expenditures in other areas.

At a Special Meeting held on March 1, 2002, the shareholders of Infodata
approved the Agreement and Plan of Merger, dated as of January 10, 2002 (the
"Agreement of Merger"), between the Company and Science Applications
International Corporation ("SAIC"). However, consummation of the proposed merger
has been delayed until the parties are able to determine whether the government
customer's action under the Customer Contract will adversely impact the Company
and result in the merger not being consummated. The Agreement of Merger will
expire pursuant to its terms on June 30, 2002.

In January 2002, pursuant to the terms of the Agreement of Merger, the Company's
Board of Directors adopted a resolution to suspend the 1997 Employee Stock
Purchase Plan during the first quarter of 2002 and to subsequently terminate it
upon the consummation of the merger with SAIC.

Item 7.  Financial Statements

The consolidated financial statements required hereunder are listed under Item
13(a) below.

PART III

Item 13.  Exhibits, List and Reports on Form 8-K

(a)      Financial  Statements.  The financial statements and exhibits required
         by Item 7 and this Item 13 of Form 10-KSB are listed below.

         Index to Consolidated Financial Statements:                       Page

         Report of Independent Accountants.............................       9

         Consolidated Statements of Operations - Each of the two years
         in the period ended December 31, 2001.........................      10

         Consolidated Balance Sheets - December 31, 2001 and 2000......   11-12

         Consolidated Statements of Shareholders' Equity for each of
         the two years in the period ended December 31, 2001...........      13

         Consolidated Statements of Cash Flows for each of the two
         years in the period ended December 31, 2001...................      14

         Notes to Consolidated Financial Statements - December 31,
         2001 and 2000.................................................   15-26

(b)      Reports on Form 8-K.

         No Current Reports on Form 8-K were filed during the
         quarter ended December 31, 2001.

EXHIBIT INDEX

Exhibit Number                   Description
--------------                   -----------
23                     Consent of PricewaterhouseCoopers LLP

                                       8
<PAGE>
                        Report of Independent Accountants


To the Board of Directors and Shareholders of Infodata Systems Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, shareholders' equity and cash flows
present fairly, in all material respects, the financial position of Infodata
Systems Inc. and its subsidiaries at December 31, 2001 and 2000, and the results
of their operations and their cash flows for each of the two years in the period
ended December 31, 2001 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and its credit facility expired on April 30, 2001 accelerating
all amounts due under the line that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



/s/ PricewaterhouseCoopers LLP
McLean, Virginia
April 5, 2002


                                       9
<PAGE>
                     INFODATA SYSTEMS INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations
                      (In thousands, except per share data)

                                                               Year Ended
                                                              December 31,

                                                              2001      2000
                                                              ----      ----

Revenue (including related party sales of $1,677 in 2000
 and $0 in 2001).........................................    $15,525   $13,022

Cost of revenue                                               12,184    10,242
                                                             -------   -------
         Gross profit....................................      3,341     2,780
                                                             -------   -------
Operating expenses:
         Research and development........................        487       379
         Selling, general and administrative.............      4,036     4,776
                                                             -------   -------
                                                               4,523     5,155

         Operating loss..................................     (1,182)   (2,375)

Gain on sale of investment...............................      1,068         -

Interest income..........................................         52       100
Interest expense.........................................        (88)      (28)
                                                             -------   -------

Net loss ................................................    $  (150)  $(2,303)
                                                             =======   =======

Basic and diluted net loss per share.....................    $  (.03)  $  (.49)
                                                             =======   =======

Weighted average shares outstanding (basic and diluted)..      4,749     4,666
                                                             =======   =======

The accompanying notes are an integral part of these consolidated financial
statements.
                                       10
<PAGE>
                     INFODATA SYSTEMS INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                 (In thousands, except share and per share data)

Assets
                                                                December 31,
                                                               2001     2000
                                                             -------   -------
Current assets:

    Cash and cash equivalents............................    $ 1,002    $  321

    Short-term investments ..............................          -       500

    Accounts receivable, net of allowance of $35 in 2001       2,994     2,583
      and $46 in 2000....................................

    Related party receivable, current....................          -       151

    Prepaid expenses and other current assets............        447        90
                                                             -------   -------

         Total current assets............................      4,443     3,645
                                                             -------   -------

Property and equipment, net                                      185       304

Goodwill and other intangibles, net of accumulated
  amortization of $3,895 in 2001 and $3,778 in 2000......          -       102

Related party receivable.................................          -       151

Other assets.............................................         20        56
                                                             -------   -------

Total assets.............................................     $4,648    $4,258
                                                             =======   =======

The accompanying notes are an integral part of these consolidated financial
statements.

                            11
<PAGE>
                     INFODATA SYSTEMS INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                                   (Continued)
                 (In thousands, except share and per share data)

Liabilities and Shareholders' Equity
                                                                December 31,
                                                              2001      2000
                                                             -------   -------
Current liabilities:

    Line of credit.......................................    $   616   $   722

    Accounts payable.....................................      1,223       588

    Accrued expenses.....................................      1,116     1,323

    Deferred revenue.....................................        747       590
                                                             -------   -------
         Total current liabilities.......................      3,702     3,223
                                                             -------   -------
Commitments and contingencies (Note 7)

Shareholders' equity:

    Preferred stock, $1.00 par value, 340,000 shares
      authorized, none issued and outstanding............          -         -

    Common stock, $.03 par value, 12,000,000 shares
      authorized; 4,794,140 and 4,705,174 shares issued
      and outstanding in 2001 and 2000, respectively.....        142       141

    Additional paid-in capital...........................     20,221    20,161

    Accumulated deficit..................................    (19,417)  (19,267)
                                                             -------   -------

Total shareholders' equity...............................        946     1,035
                                                             -------   -------

Total liabilities and shareholders' equity...............     $4,648    $4,258
                                                             =======   =======


                                       12
<PAGE>
<TABLE>
                                       INFODATA SYSTEMS INC. AND SUBSIDIARIES
                                  Consolidated Statements of Shareholders' Equity
                                         (In thousands, except share data)
<CAPTION>
                                                                       Additional                         Total
                                                 Common Stock           Paid-In       Accumulated      Shareholders'
                                            Shares         Amount        Capital        Deficit           Equity
                                           ---------     ---------      --------      -----------      -------------
<S>                                       <C>                <C>        <C>           <C>                <C>
Balance at December 31, 1999........       4,552,075          $136       $19,693       $(16,964)          $2,865

Employee stock purchase plan........          33,170             1            63              -               64

Exercise of stock options...........          52,431             2           151              -              153

Stock issued to Board of Directors
 for services.......................          27,498             1            58              -               59

Issuance of warrants for services...               -             -            55              -               55

Earthsat acquisition................          40,000             1           141              -              142

Net loss............................               -             -             -         (2,303)          (2,303)
                                           ---------        ------       -------          -----           ------

Balance at December 31, 2000........       4,705,174           141        20,161        (19,267)           1,035

Employee stock purchase plan........          75,632             1            40              -               41

Earthsat acquisition................          13,334             -            20              -               20

Net loss............................               -             -             -           (150)            (150)
                                           ---------        ------       -------          -----           ------

Balance at December 31, 2001........       4,794,140          $142       $20,221       $(19,417)            $946
                                           =========        ======      ========      =========           ======

</TABLE>
                                       13
<PAGE>
<TABLE>
                                     INFODATA SYSTEMS INC.
                             Consolidated Statements of Cash Flows
                                         (In thousands)
<CAPTION>
                                                                                Year Ended
                                                                                December 31,
                                                                          2001           2000
                                                                        --------       --------
Cash Flows From Operating Activities:
<S>                                                                      <C>          <C>
    Net loss .....................................................         $(150)       $(2,303)
      Adjustments to reconcile net loss to net cash used
        in operating activities:
          Stock Based Compensation expense........................             -             55
          Gain on sale of investment .............................        (1,068)             -
          Depreciation and amortization...........................           147            226
          Goodwill and other intangible amortization..............           117            329
        Accrued interest on line of credit........................             7             22
        Provision for doubtful accounts ..........................           (11)           (10)
        Payments received on related party receivable.............           289             12
        Discount on related party receivable .....................            13              -
        Changes in operating assets and liabilities:
            Accounts receivable...................................          (400)        (1,529)
            Prepaid expenses and other assets.....................          (345)            23
            Accounts payable .....................................           635            271
            Accrued expenses......................................          (207)           549
            Deferred revenue......................................           157            (31)
                                                                         --------       --------
               Net cash used in operating activities..............          (816)        (2,386)
                                                                         --------       --------
Cash Flows From Investing Activities:
      Purchases of property and equipment.........................           (28)          (297)
      Purchases of short-term investments.........................          (200)        (1,300)
      Proceeds from sale of investment............................         1,092              -
      Business acquisition costs..................................             5            (42)
      Proceeds from maturity of short-term investments............           700          2,500
                                                                         --------       --------
               Net cash provided by investing activities..........         1,569            861
                                                                         --------       --------
Cash Flows From Financing Activities:
      Net (repayments) borrowings under short-term debt                     (113)           700
      Issuance of common stock ...................................            41            217
                                                                         --------       --------
               Net cash used in financing activities..............           (72)           917
                                                                         --------       --------
    Net increase in cash and cash equivalents.....................           681           (608)
    Cash and cash equivalents at beginning of period..............           321            929
                                                                         --------       --------
    Cash and cash equivalents at end of period....................        $1,002           $321
</TABLE>

                                       14
<PAGE>
NOTE 1.  Summary of Significant Accounting Policies

Nature of Business

The Company, a Virginia corporation, is an information technology professional
services firm that designs, develops and implements web-based knowledge
management (KM), content management and e-Commerce solutions for commercial and
government clients.

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. However, as reflected in the
accompanying consolidated financial statements, the Company continues to suffer
recurring losses from operations resulting in a negative cash flow from
operations. In addition, the Company's credit facility expired on April 30,
2001. These factors, including the uncertainty surrounding whether and when
additional financing will be secured and whether the Company will meet its
budget expectations indicate that a substantial doubt about the Company's
ability to continue as a going concern for a reasonable period of time. The
Company's financial statements do not include any adjustments relating to the
recoverability of assets and classification of liabilities that might be
necessary should the Company be unable to continue as a going concern. The
Company's continuation as a going concern is dependent on, among other things,
its ability to obtain a new credit facility and meet its 2002 budgeted cash flow
objectives.

Although, the Company believes that it will be able to obtain a new credit
facility and meet its projected budget projections, there can be no assurance
that the Company will be able to secure financing sufficient for its needs and
at terms favorable to the Company. Additionally, there can be no assurance that
the Company will be successful in meeting budget expectations and replacing its
credit facility in 2002. Failure by the Company to obtain sufficient financing,
meet its budget expectations, or replace its credit facility may have a material
adverse effect on the Company's financial position, results of operations or
cash flows.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Infodata Systems Inc. and its wholly owned subsidiaries (collectively referred
to herein as the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenue from the sale of software licenses in accordance
with Statement of Positions No. 97-2, "Software Revenue Recognition", as
amended. Revenue from license arrangements is recognized upon shipment of the
product when persuasive evidence of an arrangement exists, delivery has
occurred, the fee is fixed and determinable and collectibility is probable. If
an ongoing vendor obligation exists under the license arrangement, revenue is
deferred based on vendor-specific objective evidence of the undelivered element.
If vendor-specific objective evidence does not exist for all undelivered
elements, all revenue is deferred until sufficient evidence exists or all
elements have been delivered. Revenue from annual maintenance and support,
including third party software maintenance, is deferred and recognized ratably
over the term of the contract. Revenue from consulting and training is deferred
and recognized when the services are performed and collectibility is deemed
probable. Revenue from consulting and professional services contracts is
recognized on the percentage-of-completion method for fixed price contracts and
on the basis of hours incurred at contract

                                       15
<PAGE>
rates for time and materials contracts. Revenue from cost reimbursement
contracts is recognized as costs are incurred. Any amounts paid by customers
prior to the actual performance of services are recorded as deferred revenue
until earned, at which time the amounts are recognized in accordance with the
type of contract.

The Company provides off-the-shelf hardware and software products to the U.S.
government under the GSA Schedule Contract and to commercial companies. Revenue
is recognized when products are shipped or when customers have accepted the
products, depending on contractual terms.

Revenue from non-U.S. customers totaled approximately $263,000 and $496,000 for
the years ended December 31, 2001 and 2000, respectively.

Stock Compensation

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation"("SFAS 123"), encourages, but does not require companies to record
compensation cost for stock-based employee compensation plans at fair value. The
Company has chosen to account for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and related Interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the estimated fair value of the Company's stock at the date of the grant
over the amount an employee must pay to acquire the stock. The Company has
adopted the "disclosure only" alternative described in SFAS 123 which requires
pro forma disclosures of net income and earnings per share as if the fair value
method of accounting has been applied.

Cash and Cash Equivalents

Highly liquid investments with an original maturity of three months or less are
classified as cash equivalents. These investments consist of income producing
securities, which are readily convertible to cash and are stated at cost, which
approximates fair value.

Short-term Investments

In addition to cash equivalents, the Company invests in debt securities
(certificates of deposit and commercial paper) with original maturities of
greater than three months that are classified as short-term investments. These
investments are carried at amortized cost plus accrued interest. Accrued
interest on these investments as of December 31, 2001 and 2000 was $0 and
$17,000, respectively.

Supplemental Disclosures of Cash Flow Information

Cash payments for interest totaled $102,300 and $6,800 in the years ended
December 31, 2001 and 2000, respectively.
                                                             Year Ended
                                                             December 31,
                                                            2001       2000
                                                            ----       ----
     Non-cash investing and financing activities:
     Business acquisition in exchange for common stock.... $20,000   $142,000

Property and Equipment

Property and equipment is depreciated using the straight-line method.
Depreciation on equipment and furniture is computed using the estimated useful
lives of the assets, which range from three to seven years. Leasehold
improvements are amortized over the shorter of the useful life of the asset or
the lease term.

                                       16
<PAGE>
Impairment of Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be
held and used, primarily property and equipment and goodwill, under the
provisions of Statement of Financial Accounting Standard No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of" ("SFAS 121"). The carrying value of long-lived assets is considered impaired
when the separately identifiable undiscounted cash flows from the asset is less
than its carrying value. In addition, the recoverability of goodwill is further
evaluated under the provisions of Accounting Principles Board Opinion No. 17,
"Intangible Assets", based upon undiscounted cash flows. In the event that the
carrying amount exceeds undiscounted cash flows, a loss is recognized based on
the amount by which the carrying value exceeds the fair value of the asset. Fair
value is determined using the anticipated cash flows discounted at a rate
commensurate with the risk involved.

Goodwill

Goodwill is being amortized using the straight-line method over a life ranging
from 18 months to ten years.

Research and Development

Research and development costs are expensed as incurred.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts and the tax basis of existing assets
and liabilities. A valuation allowance is recorded to reduce tax assets to an
amount whose realization is more likely than not.

Earnings Per Share

Basic earnings per share is based on the weighted average number of common
shares outstanding. Diluted earnings per share is based on the weighted average
number of common shares outstanding and all dilutive potential common shares
outstanding. Dilutive equivalent shares consist of stock options and warrants
using the treasury stock method.

Due to the loss in 2001 and 2000, the effect of options and warrants as
disclosed in Note 6 has not been considered on dilutive earnings per share as
this would have been antidilutive.

Significant Customers

Since the Company's largest customer is the federal government, the Company has
a concentration of credit risk associated with its accounts receivable. The
Company does not believe the likelihood of a loss arising from such
concentration is significant. The Company performs ongoing credit evaluations on
its customers.

Sales to U.S. government agencies totaled approximately $11,081,000 and
$6,531,000 in 2001 and 2000, respectively. As of December 31, 2001 and 2000,
accounts receivable due from U.S. government agencies were approximately
$1,585,000 and $1,098,000, respectively.

Fair Value of Financial Instruments

Financial instruments include cash and cash equivalents, short-term investments,
accounts receivable, and accounts payable. The carrying amounts of financial
instruments approximate fair value due to the short maturity of these
instruments.

                                       17
<PAGE>
Segment Reporting

The Company adopted Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS
131"), during 1998. SFAS 131 replaces the "industry segment" approach with the
"management" approach to reporting financial information about an enterprise's
segments. The management approach designates the internal organization that is
used by management for allocating resources and assessing performance as the
source of the Company's reportable segments. SFAS 131 also requires disclosures
about products and services, geographic areas, and major customers.

Comprehensive Income

The Company does not have any components of comprehensive income other than net
loss.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board (FASB) approved Statement
of Financial Accounting Standards No. 141 ("SFAS 141"), "Business Combinations",
and No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets". SFAS No. 141
addresses financial accounting and reporting for business combinations. All
business combinations in the scope of SFAS 141 will be accounted for using the
purchase method of accounting. The provisions of SFAS No. 141 apply to all
business combinations initiated after June 30, 2001. SFAS No. 142 addresses
financial accounting and reporting for acquired goodwill and other intangible
assets. Under SFAS 142, goodwill will no longer be amortized but will be tested
for impairment at least annually at the reporting unit level. Goodwill will be
tested for impairment on an interim basis if an event occurs or circumstances
change that would more-likely-than-not reduce the fair value of a reporting unit
below its carrying value. Intangible assets which remain subject to amortization
will be reviewed for impairment in accordance with SFAS No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of". The provisions of SFAS No. 142 are required to be applied starting with
fiscal years beginning after December 15, 2001. Adoption of SFAS No.142 is not
anticipated to have an impact on the financial position or results of operations
of the Company as the Company presently has no remaining goodwill or intangible
assets.

In October 2001, the FASB issued Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets," ("SFAS
144"), which is effective for the Company beginning in fiscal year 2002. SFAS
No. 144 supersedes previous guidance for financial accounting and reporting for
the impairment or disposal of long-lived assets and for segments of a business
to be disposed of. SFAS No. 144 retains the fundamental provisions of existing
generally accepted accounting principles with respect to recognition and
measurement of long-lived asset impairment contained in SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." However, SFAS No. 144 provides new guidance intended to address
certain significant implementation issues associated with SFAS No. 121,
including expanded guidance with respect to appropriate cash flows to be used,
whether recognition of any long-lived asset impairment is required, and if
required, how to measure the amount of impairment. SFAS No. 144 also requires
that any net assets to be disposed of by sale be reported at the lower of
carrying value or fair market value less costs to sell. SFAS 144 also expands
the reporting of discontinued operations to include any component of an entity
with operations and cash flows that can be clearly distinguished from the rest
of the Company. The Company is currently assessing the impact that the adoption
of this statement will have on its consolidated financial statements.

Adoption of Accounting Pronouncement

On January 1, 2001, the Company adopted Financial Accounting Standard No. 133
("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities."
SFAS 133 establishes new accounting and reporting standards for derivative
financial instruments and hedging activities. SFAS 133 requires that all
derivative instruments be recorded on the balance sheet at fair value. Changes
in fair value of derivatives are recorded each period in current earnings or
other

                                       18
<PAGE>
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and if it is, depending on the type of hedge transaction.
The adoption of this standard did not have a material impact on the financial
position of the Company.

NOTE 2. Accounts Receivable

Accounts receivable consist of the following:
                                                               December 31,
                                                          2001         2000
                                                          ----         ----
   U.S. government:
       Amounts billed...............................    $1,585,000   $1,098,000
       Recoverable costs and accrued profit
        on progress completed but not billed........       456,000      482,000
                                                        ----------   ----------
                                                         2,041,000    1,580,000
                                                        ----------   ----------
   Commercial customers:
       Amounts billed...............................       792,000      680,000
       Recoverable costs and accrued profit
        on progress completed but not billed........       196,000      369,000
                                                        ----------   ----------
                                                           988,000    1,049,000
                                                        ----------   ----------
   Less allowance for doubtful accounts.............       (35,000)     (46,000)
                                                        ----------   ----------
             Total..................................    $2,994,000   $2,583,000
                                                        ==========   ==========
NOTE 3.  Property and Equipment

Property and equipment consisted of:

                                    Estimated
                                   Useful Life              December 31,
                                      Years             2001           2000
                                   ----------           ----           ----

     Furniture and fixtures             7              $24,000       $22,000
     Computer equipment/software        3              414,000       388,000
     Leasehold improvements           3 - 5             80,000        80,000
                                                      --------       -------
                Total                                  518,000       490,000
     Less: Accumulated depreciation                   (333,000)     (186,000)
                                                      --------       -------
                                                      $185,000      $304,000
                                                      ========      ========

Depreciation and amortization expense for the year ended December 31, 2001 and
year ended December 31, 2000, were $147,000 and $226,000, respectively. During
2001, the Company identified property and equipment with a gross cost of
$2,813,000 that was fully depreciated and not in use. Accordingly, the Company
has removed such amounts from its accounts. Previous figures have been adjusted
to maintain comparability in these financial statements.

NOTE 4.  Income Taxes

At December 31, 2001, the Company had approximately $13,554,000 in net operating
loss carryforwards for income tax reporting purposes. Net operating loss
carryforwards of $1,090,268 expired unused in 2001 and the operating loss

                                       19
<PAGE>
carryforwards as of December 31, 2001 expire in varying amounts from 2002
through 2021. In addition, at December 31, 2001, the Company had $188,000 in
general business tax credit carryforwards that begin to expire in 2017.

The actual income tax expense attributable to pretax income for the year ended
December 31, 2001, and December 31, 2000, respectively, differed from the amount
computed by applying the Federal statutory rate of 34% as a result of the
following:
                                                       2001       2000
                                                       ----       ----
         Tax at statutory rate.................      $(51,000)  $(783,000)
         Change in valuation allowance.........      (685,000)  1,409,000
         Nondeductible amortization............             -     112,000
         Other.................................       736,000    (738,000)
                                                      -------   ---------
                                                     $      -   $       -
                                                     ========   =========

The significant components of net deferred tax (liabilities) assets are as
follows as of December 31, 2001 and 2000:
                                                       2001       2000
                                                       ----       ----
     Deferred tax assets:
       Net operating loss carryforward.........    $5,145,000  $5,995,000
       General business tax credit and
         research and development tax
         credits carryforward..................       188,000     171,000
       Other...................................       482,000     334,000
                                                   ----------   ---------
     Valuation allowance ......................    (5,815,000) (6,500,000)
                                                   ----------   ---------
     Net deferred tax asset ...................    $        -  $        -
                                                   ==========  ==========

Under the provisions of Statement of Financial Accounting Standards 109,
"Accounting for Income Taxes," the tax effect of the net operating loss and
general business tax credit carryforwards, together with net temporary
differences, represents a net deferred tax asset against which management has
fully reserved due to the uncertainty of future taxable income.

NOTE 5. Short-term Debt

The Company maintained a working capital line of credit with Merrill Lynch
Business Financial Services Inc. collateralized by accounts receivable,
equipment, and other intangibles that expired on April 30, 2001, thus
accelerating all amounts due under this line of credit. The credit facility
provided the Company with up to a $1,000,000 line of credit at a per annum rate
equal to 2.9 % over the 30-day commercial paper rate. The per annum rate
approximated the prime rate (6.68%) at December 31, 2001. Advances on the
facility were based on eligible billed accounts receivable less than 90 days
old. As of December 31, 2001 and 2000, the Company had outstanding borrowings of
$616,000 (which included $6,800 of accrued interest) and $722,000 (which
included $22,000 of accrued interest), respectively, against this line of
credit.

The amount due under the line of credit remains unpaid and the Company is
currently negotiating other financing alternatives. There can be no assurances
that obtaining such financing arrangements will be successful or that the lender
will not pursue collection through existing collateral or other means.

NOTE 6.  Stock Options and Warrants

In April 1995, the Company's shareholders approved the adoption of the 1995
Stock Option Plan (the "1995 Plan"), which (i) consolidated the Company's 1991
Incentive Stock Option Plan and 1992 Non-Qualified Stock Option Plan and (ii)
provided for the automatic grant of stock options to the members of the
Compensation Committee of the Company's Board of Directors. A total of 2,261,000
shares of Common Stock have been authorized for issuance under options granted
and to be granted under the 1995 Plan at exercise prices which will not be less
than 100% of the fair market value of the

                                       20
<PAGE>
underlying shares on the date of grant of the option. Options vest over varying
years of service. Vested options are exercisable until the earlier of ten years
from the date of grant or three months after termination of employment for
options granted under either the 1991 Incentive Stock Option Plan or the 1992
Non-Qualified Stock Option Plan. Options originally granted under the 1995 Plan
are exercisable until the earlier of ten years from the date of grant or one
month after termination of employment.

As a result of the acquisition of AMBIA Corporation ("AMBIA"), in July 1997,
each outstanding option ("AMBIA Stock Option") to purchase shares of AMBIA
Common Stock under the former AMBIA Equity Incentive Plan (as defined in the
Merger Agreement) was converted into an option ("Replacement Option") to
acquire, on the same terms and conditions as were applicable under such AMBIA
Stock Option, 4/45 of a share of Common Stock of the Company, at an exercise
price of $1.69 per share with the same expiration date as each such AMBIA Stock
Option. Replacement Options to purchase a total of 34,665 shares of the
Company's Common Stock were granted to replace the previously granted AMBIA
Stock Options. As of December 31, 2001, all Replacement Options had been
exercised, canceled or terminated.

As of December 31, 2001, the Company had reserved a total of approximately
1,879,784 shares of Common Stock for future issuance upon the exercise of stock
options under the 1995 Plan.

A summary of option activity under the 1995 Plan and the former AMBIA Equity
Incentive Plan is presented below:
<TABLE>
<CAPTION>
                                                                           Weighted Average
                                            Number of     Option Price       Option Price
                                              Shares        Per Share         Per Share
                                              ------        ---------         ---------
<S>                                         <C>          <C>                   <C>
   Outstanding at December 31, 1999......    1,079,844   $1.085-$11.000         $3.087
      Granted............................      718,586    $0.563-$5.438         $3.034
      Exercised..........................     (52,431)    $1.090-$3.813         $2.949
      Expired/Canceled...................    (245,570)    $1.250-$5.438         $2.998
                                             ---------    -------------         ------
   Outstanding at December 31, 2000......    1,500,429   $0.563-$11.000         $3.081
      Granted............................      303,998    $0.630-$1.655         $0.949
      Exercised..........................         -             -                 -
      Expired/Canceled...................    (426,713)    $0.630-$7.380         $3.069
                                             ---------    -------------         ------
   Outstanding at December 31, 2001......    1,377,714   $0.563-$11.000         $2.614
                                             ---------   --------------         ------
   Exercisable at December 31, 2000......      873,917    $1.085-$9.250         $2.877
   Exercisable at December 31, 2001......      976,032    $0.563-$9.250         $2.386
</TABLE>

                                       21
<PAGE>
<TABLE>
<CAPTION>
                        Outstanding and Exercisable by Price Range as of 12/31/01

                                               Options Outstanding            Options Exercisable
                                               -------------------            -------------------
                                                Weighted
                                  Number         Average        Weighted        Number        Weighted
                               Outstanding     Remaining        Average       Exercisable     Average
        Range of                 as of         Contractual      Exercise        as of         Exercise
     Exercise Prices             12/31/01         Life          Price          12/31/01        Price
   ----------------------        --------      -----------      --------      -----------     ----------
<S>  <C>          <C>            <C>                <C>          <C>              <C>            <C>
     $0.5625      $0.8500        157,498            9.25         $0.715           74,373         $0.759
     $1.0300      $1.1875        155,604            6.81         $1.119          120,230         $1.131
     $1.3125      $1.6875        119,934            6.32         $1.523          113,119         $1.522
     $1.6900      $1.8905        144,499            5.36         $1.762          121,690         $1.752
     $1.9375      $2.1250        138,473            6.67         $2.061           84,825         $2.074
     $2.2000      $2.6565        122,184            5.79         $2.409           90,752         $2.378
     $2.8750      $2.8750        265,792            6.65         $2.875          204,790         $2.875
     $2.8905      $5.1250        142,967            6.82         $4.239          119,453         $4.112
     $5.3755      $11.000        130,763            4.77         $7.095           46,800         $5.961
                               ---------         -------        -------         --------        --------
                               1,377,714            6.56         $2.614          976,032         $2.386
</TABLE>
The Company complies with the disclosure requirements of SFAS 123, "Accounting
for Stock-Based Compensation". The Company applies APB Opinion 25 and related
interpretations in accounting for its plans. Accordingly, compensation cost has
been recognized for its stock plans based on the intrinsic value of the stock
option at date of grant (i.e., the difference between the exercise price and the
fair value of the Company's Common Stock). Had compensation cost for the
Company's stock-based compensation plans been determined based on the fair value
at the grant dates for awards under those plans consistent with the method of
SFAS 123, the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below.

                                                      2001         2000
                                                      ----         ----
         Net loss as reported................       $(150,000) $(2,303,000)
         Pro forma compensation expense......        (380,000)   (813,000)
                                                    ---------    ---------
         Pro forma net loss..................       $(530,000) $(3,116,000)
                                                    =========  ===========
Net loss per share:
                                                      2001         2000
                                                      ----         ----
         Basic and diluted, as reported......        $(.03)        $(.49)
         Basic and diluted, pro forma........        $(.11)        $(.67)

The weighted average fair value of options granted in 2001 and 2000 was $0.60
and $2.45, respectively. The fair value of each option is estimated on the date
of grant using the Black-Scholes option-pricing model with the following
assumptions used for grants in 2001 and 2000: no dividend yield and expected
life of five years, and expected volatility of 126% and 154% for 2001 and 2000,
respectively. The risk-free interest rate for the years ended December 31, 2001
and 2000 was 4.78% and 5.50%, respectively.

From time to time, the Company may be required to grant stock options as partial
or complete remuneration for services it receives. The Company grants such
options outside the scope of its formalized 1995 Plan. As of December 31, 2001
and 2000, fully vested options to purchase a total of 260,000 shares and 310,000
shares, respectively, at fair market value as of the date of grant had been
granted outside the scope of the 1995 Plan and were outstanding.

                                       22
<PAGE>
In October 2000, the Company issued a fully vested non-forfeitable warrant to an
investment capital firm with an estimated fair value of $55,000 to purchase
100,000 shares of Common Stock through October 2005 at an exercise price of
$1.68 per share in exchange for certain investment banking services. As of
December 31, 2001, these warrants had not been exercised.

NOTE 7.  Commitments and Contingencies

Operating Leases

The Company has entered into a lease for its corporate headquarters facility in
Fairfax, Virginia that expires on July 31, 2003.

In March 2001, the Company subleased 2,018 square feet of office space in its
Fairfax, Virginia headquarters to a third party for the period of April 1, 2001
to July 31, 2003. Sublease payments cover the Company's costs for that space up
to July 31, 2003.

Future minimum lease payments under non-cancelable leases as of December 31,
2001 are as follows:

                                Year              Amount
                                ----              ------
                                2002            $467,000
                                2003             243,000
                                                 -------
               Total Minimum Lease Payments      710,000
                                                 -------
               Less Sublease Income              (14,000)
                                                --------
               Net Minimum Lease Payments       $696,000
                                                --------

Rent expense charged to operations for the years ended December 31, 2001 and
2000 amounted to $722,000 and $800,000, respectively.

Contingencies

Costs charged to cost-type U.S. government contracts are subject to annual audit
by the Defense Contract Audit Agency or other duly authorized representatives of
the Federal government. No audits have been completed for any periods commencing
after 1998. During the year 2002, the Company anticipates that the audit for the
year 1999 will commence and in the opinion of management, adjustments resulting
from the completion of such audit and future audits are not expected to have a
material impact on the Company's financial position or results of future
operations.

From time to time, the Company is subject to claims arising in the ordinary
course of business. In the opinion of management, no such matter, individually
or in the aggregate, exists which is expected to have a material effect on the
results of operations, cash flows or financial position of the Company.

NOTE 8. Employee Benefit Plan

In 1988, the Company established an employee benefit plan (the "Benefit Plan")
which qualifies under Section 401(k) of the Internal Revenue Code. The Benefit
Plan allows salaried employees to contribute a part of their compensation toward
their retirement on a tax-deferred basis. Required Company contributions equate
to 50% of the first 6% of the employee's semi-monthly deferral to the Benefit
Plan and totaled approximately $178,000 in 2001 and $180,000 in 2000. In
addition to the aforementioned contributions, the Company may, at the sole
discretion of its Board of Directors, make profit-sharing contributions to the
Benefit Plan. No contributions were made in 2001 or 2000.

As adopted by the Company and approved by its shareholders in May 1997, the
Company established an employee stock purchase plan for all eligible employees
to purchase shares of its Common Stock at 85% of the lower of the fair market

                                       23
<PAGE>
value on the first or the last day of each three-month offering period.
Employees may authorize the Company to withhold up to 15% of their compensation
during any offering period, subject to certain limitations. The 1997 Employee
Stock Purchase Plan authorizes up to 400,000 shares to be issued. During fiscal
2001 and 2000, shares totaling 54,465 and 53,289, respectively, were issued
under the plan at a weighted average price of $0.67 and $1.14 per share,
respectively. At December 31, 2001, 212,756 shares were reserved for future
issuance.

NOTE 9. Related-Party Transactions

The Company incurred management consulting fees of approximately $104,000 and
$106,000 in 2001 and 2000, respectively, for services rendered by certain
directors of the Company. In addition, amounts payable for these services to
companies employing these directors were $7,000 and $8,000 at December 31, 2001
and 2000, respectively.

In March 2000, the Company was engaged by Claria Corporation (CLARIA) to provide
web-based design and development services. Through September 30, 2000, the
Company recognized approximately $400,000 in revenue and related receivables
under its contract with CLARIA. CLARIA, an on-line recruiting firm, informed the
Company in September that it would be unable to continue to make timely payments
pursuant to the terms of its contract with the Company. Mr. Alan S. Fisher, the
vice-chairman of the Company, is the chairman of the board of directors of
CLARIA. On November 13, 2000, CLARIA executed a twenty-four month promissory
note in the principal amount of $314,396. As of December 31, 2000, the principal
amount was $302,465, the note yielded 9.63% annual interest, was payable in
monthly installments of $14,454, and was personally guaranteed by Mr. Alan S.
Fisher and Mr. Razi Mohiuddin, a director of CLARIA and a former officer of
Infodata Systems Inc. In April 2001, the guarantors of the note offered to
prepay the outstanding principal amount, less a discount of approximately 4%.
The Company agreed to the discount and on June 22, 2001, the note was paid off
in the amount of approximately $289,000.

In December 1999, the Company was engaged by Redknife, Inc. (REDKNIFE) to
develop and implement a comprehensive systems infostructure for processing and
exchanging business transactions over the web. Through December 31, 2000, the
Company recognized approximately $1,277,000 in revenue and related receivables
under its contract with REDKNIFE. During the fourth quarter ended December 31,
2000, a dispute arose between the Company and REDKNIFE regarding future
obligations, work completed and the amounts currently due the Company of
approximately $413,000 and owing under both the Master Consulting Agreement and
the Letter Agreement. Mr. Alan S. Fisher, the vice-chairman of the Company, is a
general partner and founder of Wingspring, a shareholder of REDKNIFE. On
February 8, 2001, a contract modification was consummated resulting in a
reduction of contract value by $188,000. During 2001, the balance amount due to
the Company of $225,000 was paid in full by REDKNIFE. The financial statements
as of December 31, 2000 had been adjusted through a reduction in revenue to
reflect this change in contract value.

NOTE 10.  Segment Reporting

In 1998, Infodata adopted SFAS 131, "Disclosures about Segments of an Enterprise
and Related Information." Under SFAS 131 the Company has determined that it
operates in three segments: (1) Solutions, (2) Proprietary Products, and (3)
Third Party Products.

The accounting policies of the segments are the same as those described in the
"Summary of Significant Accounting Policies." Infodata evaluates its segments on
the basis of revenue less direct costs. The Company does not internally report
assets on a segment basis. For comparison purposes, the Company has prepared
separate information for the years ended December 31, 2001 and 2000. In the year
2000, the Company elected to evaluate all its segments based on revenue less
direct costs.

The table below presents information about reported segments for the years
ending December 31, 2001 and 2000, as well as reconciliation to reported loss
before income taxes (in thousands).

                                       24
<PAGE>
<TABLE>
<CAPTION>
                                                   2001                                                  2000
                            ----------------------------------------------------  -----------------------------------------------
                              Solutions   Third Party Proprietary     Total        Solutions  Third Party  Proprietary    Total
                                           Products     Products                                Products    Products
                            ----------------------------------------------------  -----------------------------------------------
<S>                             <C>           <C>         <C>         <C>           <C>            <C>       <C>        <C>
Revenue.....................    $12,214       $1,733      $1,578      $15,525       $10,548        $725      $1,749     $13,022
Direct costs................      9,307        1,558         122       10,987         5,891         668         223       6,782
                                  -----        -----         ---       ------        ------        ----        ----       -----
Segment profit..............      2,907          175       1,456        4,538        $4,657         $57      $1,526       6,240
                                  =====          ===       =====        -----        ======        ====      ======       -----
Research and development....                                             (488)                                             (379)
Other costs not allocated
  to segments, primarily
  selling, general and
  administrative............                                           (5,232)                                           (8,236)
Gain on sale of investment..                                            1,068                                                 -
Interest net................                                              (36)                                               72
                                                                         ----                                                --
Loss before income taxes....                                            $(150)                                          $(2,303)
                                                                        =====                                           =======
</TABLE>
NOTE 11. Business Acquisition

On March 30, 2000, the Company acquired a business unit from Earth Satellite
Corporation specializing in providing software development services to the U.S.
intelligence community. The Company issued 40,000 shares of its Common Stock
with a fair market value of $3.563 per share, which was equal to the average of
the closing bid and ask prices of the Company's Common Stock on that date. On
February 9, 2001, the Company issued an additional 13,334 shares of its Common
Stock with a fair market value of $1.50 per share, to Earth Satellite
Corporation pursuant to a working capital adjustment provision included in the
acquisition agreement between the Company and Earth Satellite Corporation in
this transaction, which resulted in a purchase price adjustment of approximately
$20,000 that was attributed to goodwill. The acquisition cost of this business
unit as of December 31, 2001 was approximately $199,000, including $37,000 of
direct cost attributed to the business unit's sole contract. The acquisition
value of that contract was amortized over its life of 18 months.

NOTE 12. Subsequent Events

On March 1, 2002, the Company was notified by its major United States
Intelligence Community customer that the scope of a large contract (the
"Customer Contract"), accounting for approximately 40% of the Company's revenue
in 2001, was going to be substantially reduced. Although the Company believes
that it had performed well under the Customer Contract, the terms of the
Customer Contract give the government customer the right to change the scope of
its services engagement, which right is typical in virtually all government
contracts. As a result of the foregoing, the Company has reduced its expenses to
adjust for this loss of revenue by reducing the number of its employees,
reducing its rent expense and reducing expenditures in other areas.

At a Special Meeting held on March 1, 2002, the shareholders of Infodata
approved the Agreement and Plan of Merger, dated as of January 10, 2002 (the
"Agreement of Merger"), between the Company and Science Applications
International Corporation ("SAIC"). However, consummation of the proposed merger
has been delayed until the parties are able to determine whether the government
customer's action under the Customer Contract will adversely impact the Company
and result in the merger not being consummated. The Agreement of Merger will
expire pursuant to its terms on June 30, 2002.

In January 2002, pursuant to the terms of the Agreement of Merger, the Company's
Board of Directors adopted a resolution to suspend the 1997 Employee Stock
Purchase Plan during the first quarter of 2002 and to subsequently terminate it
upon the consummation of the merger with SAIC.

In March 2002, the Company and the owner of the building in which its corporate
headquarters facility is located, agreed to modify the terms of the operating
lease to reflect a decrease of approximately 9,777 square feet effective April
1, 2002. Since a portion of this space was previously subleased to a third
party, sublease income is expected to decline significantly

                                       25
<PAGE>

in 2002 and is estimated to be $0 in 2003. Future minimum lease payments under
the non-cancelable lease are expected to decline in both 2002 and 2003. The
lease expiration date of July 31, 2003 remains unchanged.



                                       26